UNOBSERVABLE EFFECTS AND SPEED OF ADJUSTMENT TO TARGET CAPITAL STRUCTURE

Authors

  • Bolaji Tunde Matemilola
  • Bany Ariffin Amin Noordin
  • Wan Azman Saini Wan Ngah
  • Annuar Md Nassir

DOI:

https://doi.org/10.33736/ijbs.580.2015

Abstract

The paper investigates whether unobservable firm-specific effects such as managerial ability is a major component of the target capital structure. We apply the system generalized method of moments that accounts for unobservable firm-specific effects. Our results reveal that unobservable firm-specific effects such as managerial ability are a major component that explains most of the cross-sectional variation in firms’ capital structure in Malaysia.
Keywords: Capital Structure; Unobservable Effects; System GMM; Malaysia.

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Published

2017-11-30

How to Cite

Matemilola, B. T., Noordin, B. A. A., Wan Ngah, W. A. S., & Md Nassir, A. (2017). UNOBSERVABLE EFFECTS AND SPEED OF ADJUSTMENT TO TARGET CAPITAL STRUCTURE. International Journal of Business and Society, 16(3). https://doi.org/10.33736/ijbs.580.2015